MERS, another angle.


MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. V. CARLTON J. DITTO, ET AL.

Mortgage Electronic Registration Systems, Inc. v. Carlton J. Ditto, et al.
E2012-02292-SC-R11-CV

http://www.tsc.state.tn.us/press/2015/12/11/supreme-court-rules-mortgage-registration-business-has-no-constitutionally

Petitioner Mortgage Electronic Registration Systems, Inc. (MERS) brought this action to set aside a tax sale of real property. MERS argues that the county’s failure to provide it with notice of the tax sale violated its rights under the Due Process Clause of the federal Constitution. The defendant purchaser of the real property filed a motion for judgment on the pleadings; he argued that MERS did not tender payment of the sale price plus the accrued taxes before bringing suit, as is required by statute in a suit challenging the validity of a tax sale. The defendant purchaser also argued that MERS did not have an interest in the subject property that is protected under the Due Process Clause. The trial court granted the defendant’s motion for judgment on the pleadings, holding that MERS did not have an interest in the property. The Court of Appeals affirmed, though based on MERS’s lack of standing to file suit. We hold that when a plaintiff who claims a protected interest in real property files suit to have a tax sale declared void for lack of notice, the pre-suit tender requirement in Tennessee Code Annotated section 67-5-2504(c) does not apply, so MERS was not required to tender payment before filing this lawsuit. We further conclude that MERS acquired no protected interest in the subject property through either the deed of trust’s designation of MERS as the beneficiary solely as nominee for the lender and its assigns or its reference to MERS having “legal title” to the subject property for the purpose of enforcing the lender’s rights. Because MERS had no protected interest in the subject property, its due process rights were not violated by the county’s failure to notify it of the tax foreclosure proceedings or the tax sale. Accordingly, we affirm the grant of judgment on the pleadings in favor of the tax sale purchaser, albeit on a different basis from the Court of Appeals’ decision.

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